Five years ago, when Britain handed Hong Kong and its people back to mainland China, the Western media was full of predictions about the end of political freedom. Images were conjured up of the People's Liberation Army arresting pro-democracy activists and shutting down newspapers.

Five years on, such things have not happened. Hong Kong has suffered not from a political crackdown but rather from a severe economic downturn.

Decades of growth suddenly ended and the inhabitants of the colony-turned-special administrative region (SAR) have learned at first hand such concepts as recession, deflation, negative equity and joblessness.

The concept of "one country, two systems" has generally worked, and this is acknowledged by those who monitor Hong Kong events, including the United States and Britain. That is not to say that there has been no interference by Beijing: there has, though much less than there could have been.

One example was the endorsement by Chinese leaders more than a year ago of Tung Chee-hwa for a second term. This was followed by Tung being declared the winner without an election being held.

Perhaps no challenger would have emerged in any event, but it is certainly possible that China's endorsement made it appear pointless for anyone to seek to contest the election.

Invisible hand at the helm

Clearly, however, Beijing did take steps to allow Hong Kong a high degree of autonomy. Foreign affairs and defence are reserved for the central government, But while China's concept of foreign affairs is very wide, including accreditation of foreign journalists, this was not done in Hong Kong.

Despite the presence of a Chinese garrison, the soldiers are virtually invisible, ordered to remain within barracks. The Chinese government also severely limited visits to Hong Kong by Chinese officials, and even tourists, until urged by Hong Kong to allow more mainland tourists in.

China is also doing everything it can to assist the ailing Hong Kong economy and is currently considering how to give Hong Kong companies privileges above those accorded to those in other economies without violating World Trade Organisation rules.

The attitude of Hong Kong people towards the mainland has also changed greatly in these five years. Fear of the communists is much less than before. And while in the past many people saw the mainland as the source of most of Hong Kong's problems, today many see the mainland as the solution to many of Hong Kong's ills.

The problems that have plagued Hong Kong during the last five years have largely been the result of forces beyond its control, such as the Asian financial crisis and the global economic downturn. But still, its leadership is widely seen as being fumbling and uninspiring.

Political link in administration

The record of the SAR itself is spotty. The early decision not to prosecute publisher Sally Aw, only her executives, will remain a black mark against the SAR. But the decision to delay implementation of Article 23 of the Basic Law, calling for legislation against subversion, secession, sedition and treason, was certainly welcome.

The immediate priority of everyone in the aftermath of the handover was stability and continuity. It is a tribute to Tung and the Chinese leadership that they were willing to accept the entire administration left behind by the last Governor, Christopher Patten. This certainly helped to lessen the shock of the change in sovereignty.

But it also resulted in the new Chief Executive being saddled with a team not of his own choosing. Now, Tung has put into place an accountability system, with ministers who will assume political responsibility if things go wrong. Finally, he is able to pick his own people to help him run the government.

Aside from the ministerial system, the Chief Executive has also appointed the leaders of two major parties into the Executive Council, or Cabinet. This may mark a major step in the evolution of political parties in Hong Kong. It has, at the least, created a link between the executive and the legislature. The government will no longer be able to claim that its work is being hampered by a hostile legislature.

Delegation of power

The SAR government faces many challenges in its second term. Article 23 laws can no longer be deferred and will have to be drafted carefully so as not to impact current rights and freedoms. And preparations will have to be made for greater democratisation, allowed by the Basic Law after 2007.

Only time will tell how well the new ministerial system will work. Although Tung has been accused of concentrating power in his hands, he has explained that his intention is actually to delegate more authority to his principal officials, thus providing for more efficient government.

One of the principal problems of his first term was a tendency towards vacillation and indecisiveness. If the ministerial system works the way it is supposed to, things should be better in the second term. — GVNN/China Post

Frank Ching has written on China for several decades. He was with The New York Times during the 1960s and 1970s. He opened The Wall Street Journal's Beijing bureau in 1979. From 1992-2001 he wrote the weekly column "Eye on Asia" in the Far Eastern Economic Review .